Timely Decision

Will small-business owners back their employees up against a
wall and pressure them to take paid time off--called "comp
time"--instead of paying them time-and-a-half for overtime
work? That's the contention of the Clinton administration,
congressional Democrats and the AFL-CIO, who are opposing GOP House
and Senate bills that give employers the option of offering comp
time--in lieu of pay--to employees.

Comp time is prohibited under the Fair Labor Standards Act
(FLSA), established in 1938, which requires employers to pay
time-and-a-half to nearly all hourly employees who work overtime.
Both Republicans and Democrats agree the prohibition is an
anachronism, but there are partisan differences over how to
structure a comp-time provison.

The Republican-backed Working Families Flexi-bility Act (H.R. 1)
would eliminate the comp-time restriction. That bill passed the
House in March by a narrow margin, which bodes ill for any
Republican effort to override the promised Clinton veto.

A veto, however, is not an issue until the Senate passes the
bill. Although Sen. John Ashcroft's (R-MO) Family Friendly
Work- place Act (S.4) passed the appropriate committee in March,
Senate Democrats are likely to filibuster S.4 when it reaches the
Senate floor, unless some significant changes are made.

The two Republican bills have primarily the same central
features: They modify the FLSA to allow employers to offer
employees one-and-a-half hours off in lieu of time-and-a-half pay
for each overtime hour worked.

Employers would have to pay the value of the unused comp time at
the end of the year, or workers could give the employer 30
days' notice and claim the balance in cash. The bills also give
employers the same right to "cash out" a worker's
accrued comp time at their discretion; however, that applies only
to time accrued over 80 hours.

The Opposition

Clinton and organized labor groups both object to the bills.
First, although the bills make it unlawful to "intimidate,
threaten or coerce" an employee, they fear that the employer
could pressure a worker to take comp time in lieu of cash or force
an employee to use the comp time at the employer's
convenience.

Second, opponents believe the GOP bills pay too much heed to
employer convenience. The bills allow an employer to turn down a
request to use comp time if the employee's absence "would
unduly disrupt the operations of the business."

In a letter to the chairman of the House Committee on Education
and the Workforce, before the House bill was passed, Acting
Secretary of Labor Cynthia Metzler stated the administration's
view was that employees should be allowed to take comp time as long
as it doesn't cause "substantial injury to the
employer." That's a much narrower standard than what's
provided for in H.R. 1.

Despite the arched backs on both sides of the issue, however, a
compromise seems likely, especially when using past Congressional
actions as a yardstick: Over the past few years, Congress has been
quick to pass seemingly controversial bills because of their
perceived appeal to women.

SBA Update

Women business owners looking for capital but afraid of being
rejected by banks got a boost last year when the Small Business
Administration's Women's Prequalification Pilot Loan
Program went national (see "Entrepreneurial Woman,"
February). Nonetheless, some women worried that because local SBA
offices were given the choice of whether or not to adopt the
program, it might not come to their area. The concerns of many may
be over; the SBA recently reported that 50 offices nationwide have
picked up the program.

Under the Prequalification Program, nonprofit intermediaries
help applicants develop business plans and loan packages, then
submit them to the SBA. If the SBA finds the borrower is qualified,
it issues a prequalification guarantee letter the loan applicant
can then take to banks. For more information on how to apply,
contact your local SBA field office or call (800) 8-ASK-SBA.